Legislation overview (January 2019)

Taxes

VAT

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the transfer of funds from a special account of an agricultural company to repay VAT liabilities” of 16.01.2019, No. 174/6/99-99-15-03-02-15/ІПК considered that situation. The VAT payer was registered as a subject of the special VAT regime in accordance with Art. 209 of the Tax Code of Ukraine. At present, the taxpayer is on the general tax system. At the same time, on his/her special account of an agricultural company opened in the bank, the funds are recorded, which the taxpayer intends to count against repayment of tax liabilities with VAT for future tax periods. Is this possible?

The funds currently recorded on the special account of agricultural company must be transferred to the current account of such a company.

Given that funds accumulated on a special account of a company are the funds of such an agricultural company and were not paid to the state budget, then the latter cannot be credited from the special account of the agricultural company for the payment of taxable VAT obligations payable to the state budget.

In order to pay VAT obligations, such funds must be transferred from the current account of the taxpayer to his/her electronic account in the system of electronic administration of VAT.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the necessity of drawing up a tax bill and charging VAT tax liabilities for the entire amount of lease payments, except for leasing remuneration” of 14.01.2019, No. 118/6/99-99-15-03-02-15/ІПК considered this situation. The VAT payer (the lessor) has agreed with the counterparty that he/she will buy equipment for him/her and rent it to him/her (leasing), with subsequent redemption. For its service the lessor will receive profit (leasing reward). Thus, under a financial lease agreement, one party (the lessor) undertakes to buy from the seller a certain thing and transfer this thing to the lessee for use for a certain period (not less than a year) for the established fee (lease payments).

What are the consequences of VAT for such transactions?

The lessor, on the date of the actual transfer of the financial lease object to the lessee, is obliged to charge VAT liabilities, based on the contractual value of the financial lease object, and draw up and register the tax invoice for such transaction in the URTI.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On VAT taxation of transactions for the responsible storage of passenger cars” of 15.01.2019, No. 140/6/99-99-15-03-02-15/ІПК reported that the transfer transaction to the dealer Passenger cars for responsible storage for the enterprise are not subject to VAT. Under such a transfer, the company does not determine the tax obligations, and the dealer – a tax credit. At the same time, the provision of services for storing property for a dealer is subject to VAT.

In case of delivery of passenger cars to the dealer, VAT obligations of the company arise according to the rule of the “first event”. The tax invoice, registered in the Unified Register of Tax Invoices, is the reason for the dealer to include the amount of VAT to the tax credit.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the taxation of VAT transactions with the transfer of a company to a participant of corporate rights and shares owned by the company, as a result of the withdrawal of such a member of the partnership” 15.01.2019, No. 138/6/99-99-15-03-02-15/ІПК reports that when a company returns to one of the founders its contribution in the form of funds or corporate rights and shares of other entities belonging to the company, the object of VAT taxation does not arise.

However, if the company returns its contribution in the form of property to the founder, it will be considered as supply of the goods. Accordingly, such property will be subject to VAT on general grounds.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On peculiarities of determination of VAT liabilities when performing warranty repairs using the obtained free of charge import spare parts and a tax invoice in the implementation of several supply transactions to a single buyer” of 16.01.2019, No. 165/6/99-99-15-03-02-15/ІПК reports: if you supplies goods/services two or more times a month to one buyer – this is a rhythmic supply. The rhythmic nature of the transaction depends only on the fact of their commission, and not on the fact that they were drawn up by one or several contracts. Tax liabilities arise from an event that occurred earlier, namely on a date:

• or obtaining advance from the buyer;
• or shipment of goods.

Tax liabilities do not depend on whether the first event occurs under one or more civil law contracts.

If you supply the goods to one buyer two or more times a month for one or different contracts – you can make a consolidated tax invoicefor the total amount of supply.

When the supplier does not prepare consolidated tax invoices and the buyer pays the product on the same day with several advances within one or more contracts, the seller can make one tax invoice for the total amount of such advances.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the impossibility of registering in the URTI the adjustment calculation to the tax invoice drawn up for the purpose of correction of mistakes made with the prior adjustment of the indicators of such a tax invoice and the cancellation of the registration of the adjustment calculation, which contains errors” of 15.01.2019, No. 144/6/99-99-15-03-02-15/ІПК considered the situation when the enterprise made a mistake in the tax invoice (TI) and the adjustment calculation (AC) to it.

Representatives of the fiscal department explained how to correct. Taxpayers have completed the electronic service for VAT payers, through which you can see all the indicators of TI, published in the URTI for the current date, taking into account registered AC to it. All the necessary data can be downloaded in xls format.

Access to these data is provided in the private section (personal cabinet) of the Electronic cabinet in the section “URTI”. In order to correct the errors in previously prepared AC, correct adjust all incorrect lines of TI on the date of adjustment. To do this, use the information on the indicators of TI taking into account all AC registered to it, received through the electronic service.

Each line of TI, which you adjust, must correspond to two lines of AC:

• in the first one – “reset to zero” (reverse) the line of TI with an error. When you fill in the graph 1.2, correctly specify the serial number of the line of corrective TI;
• in the second one – indicate the correct indicators. In line 1.2 of this line, write a new line number, which is not in TI, to which AC is prepared.

In column 2.1, in both lines of AC, indicate the conditional code 302, which corresponds to the reason for the correction of “Elimination of ambiguities”.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the definition of the term “agricultural enterprise – producer” of 22.12.2018, No. 5372/6/99-99-15-03-02-15/ІПК reported that paragraph 63 of subsection 2 of section XX of the TCU provides for the temporary exemption from VAT of export transactions:

• soybeans – from 01.09.2018 to 31.12.2021;
• seeds of fennel or rape – from 01.01.2020 to 31.12.2021.

The exemption does not apply to export transactions by agricultural companies - producers of soybeans and rape or rape seeds grown on agricultural land owned or used by the permanent residents or used by them on a lease (sublease) or emphyteusis basis.

However, there is no definition of the term “agricultural company” in the current legislation. Therefore, the official definition of this definition of exemption from VAT is not applicable to such transactions.

USC

The State Fiscal Service of Ukraine in category 301.06 “ZIR” answered the questions, which indicators to be shown in column 3 of table 1 of Annex 5 of the Report on the amount of accrued income of insured persons and the amount of USC accrued?

Thus, in column 3 “The amount of net income (profit) declared in the tax return/Self-defined income amount/Share of distributed income” in Table 1 of the report on the amount of accrued income of insured persons and the amount of the accrued unified contribution (form No. D5 annual) approved by the order Ministry of Finance of 14.04.2015 No. 435, are reflected by:

• individuals - entrepreneurs on the general system of taxation and persons engaged in independent professional activities – net taxable income (profit) specified in the tax return. The lines for each calendar month indicate the average taxable income, which is determined by dividing the annual net income (profit) by the number of months during which such a payer was registered as a payer of the unified contribution to the compulsory state social insurance (hereinafter – unified contribution);
• individuals - entrepreneurs who chose a simplified taxation system – self-determined amount of income. The amount of income, which cannot be less than the minimum wage established by law for a month is to be indicated in the lines for each calendar month;
• members of the farm – the share of distributed income received by such payers from the net profit of the farm in the reported year, which is subject to the personal income tax. The lines for each calendar month indicate the average taxable income, which is determined by dividing the annual distributed income by the number of months during which such a payer was registered as a payer of the unified contribution.

Individuals-entrepreneurs, in table 1, fill in all columns. For those who are on the simplified system in table 1 of columns 3 and 4 will be the same, because there is indicated a minimum wage (from the editorial board: the situation is when the USC is paid from the minimum wage. If the individual entrepreneur paid a higher value for the USC, in columns 3 and 4 the self-defined amount of income, from which the USC has been paid, is given). For the general system, columns 3 and 4 may be different. In column 3, the amount of net income, which must coincide with the tax information, in column 4 – the amount within the maximum value.

The error report is not considered to be submitted and the income information from it will not fall into the register of insured persons and will not be credited to the insurance record. To enroll an entrepreneur’s insurance record, it is necessary to correct the reporting errors and re-submit the annual report to the bodies of the state fiscal service. The deadline for submission of Annex 5 for 2018 is February 11, 2019.

PIT and War Tax

The State Fiscal Service of Ukraine in the category 103.25 “ZIR” answers the question of how the personal income tax is taxed and on what basis income is reflected in the tax calculation according to the form No. 1DF, the amount paid by the employer in favor of domestic higher and vocational schools for the training of the individuals (of the employee).

Article 165 of the Tax Code of Ukraine (hereinafter – TCU) establishes a list of incomes that are not included in the calculation of the total monthly (annual) taxable income of the taxpayer, in particular, the amount paid by any legal entity or individual in favor of domestic higher and vocational education establishments for education, for training or retraining of a taxpayer, but not more than three times the amount of the minimum salary established by law on January 1 of the reporting (tax) year for each full or incomplete month of the trainees preparation, training or re-training of such an individual (paras.165.1.21 of TCU).

In 2019, an amount of UAH 12 519.00 (UAH 4173.00 × 3) for full or part-time training is exempted from the PIT taxation.

The accrual, withholding and payment (transfer) of the personal income tax to the budget is carried out in accordance with the procedure established by Art. 168 of TCU.

Thus, the amount paid by the employer in favor of domestic higher and vocational education institutions, which does not exceed UAH 12 519.00 in 2019 for each full or part-time month of training, preparation or retraining of an individual (employee), is not included in the taxable income of such an individual.

In this case, the funds paid by the employer for the training of an individual (employee) in terms of exceeding the amount specified in paras. 165.1.21 of TCU, the personal income tax is taxed at the rate specified in para. 167.1 of the Tax Code (18%).

The procedure for filling and submission by the tax agents of the tax calculation of the amount of income accrued (paid) in favor of individuals, and the amount of tax deducted from them is approved by the order of the Ministry of Finance of 13.01.2015 No. 4 (hereinafter – the Procedure).

In accordance with the Guide of income item in the Annex to the Procedure, the amount paid by the employer in favor of domestic higher and vocational education institutions for an individual for his/her preparation or retraining is reflected in the tax calculation according to the form No. 1DF according to the income “145”.

Other Taxes and Duties

The State Fiscal Service of Ukraine in its letter “On the deduction of excise tax at full rate in case of alienation for 365 days of a vehicle imported at reduced rates of excise tax” of 29.12.2018 No. 40672/7/99-99-19-01-01-17 reported the following.

According to para. 7 of para. 15 of subsection 5 of “Transitional Provisions” of the Tax Code of Ukraine (in the wording valid before 25.11.2018) in case of alienation within 365 days from the date of registration of vehicles, the importation of which was the subject to the excise tax rates specified in this item, the taxpayer is obliged to pay the excise tax on such vehicles at the rates established by Art. 215 of TCU.

Paragraph 8 of the Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the taxation of excise tax on motor vehicles” of 08.11.2018 excludes No. 2611-VIII of para.15 of subsection 5 of section XX of “Transitional Provisions” of the TCU.

In accordance with para. 1 of Art. 3 of the Customs Code of Ukraine when carrying out customs control and customs clearance of goods, vehicles of commercial purpose, which are transported through the customs border of Ukraine, only the norms of the laws of Ukraine and other normative legal acts on matters of state customs matters, applicable on the day of acceptance of the customs declaration by the body of incomes and fees of Ukraine.

Consequently, if the customs clearance of vehicles was subject to reduced rates of excise duty with an obligation to pay excise duty in the event of deduction within 365 days from the date of registration of these vehicles, in connection with the exclusion of the provision of para.15 of subsection 5 of section XX of “Transitional provisions” of TCU, today there is no such obligation on the full rate of excise duty payment.

The State Fiscal Service of Ukraine in its letter “On the Administration of Ecological Tax” of 16.01.2019 No. 1422/7/99-99-12-03-04-17provided clarification on the application of a new procedure for collecting and distributing revenues from the ecological tax, in terms of carbon dioxide emissions into the atmosphere.

In particular, the letter states that Section VIII of the Tax Code of Ukraine was amended by the Law of Ukraine “On Amendments to the Tax Code of Ukraine and certain legislative acts of Ukraine on improving the administration and revision of rates of certain taxes and duties” of 23.11.2018, No. 2628-VIIІ in a part of the definition of taxpayers which make the ecological tax on carbon dioxide emissions, and tax rates.

At the same time, for carbon dioxide emission obligations arising from the results of operations in 2019, taxpayers in the part of carbon dioxide emissions are entities that have total annual carbon dioxide emissions based on data from statistical reporting forms 2-TP air for 2018, a copy of which is submitted to the SFS authority at the location of the stationary source of emissions, exceeds 500 tons.

In addition, from January 1, 2019, the tax rate for carbon dioxide emissions from stationary sources from UAH 0.41 per ton was raised to UAH 10 per ton, which is increased by 24.4 times.

At the same time, the Law of Ukraine “On Amendments to the Budget Code of Ukraine” of 22.11.2018, No. 2621-VIIІ amended the composition of revenues of the State Budget of Ukraine, which is defined in Art. 29 of the Budget Code of Ukraine, in terms of the distribution of funds of the tax between the budgets.

In particular, according to para. 16 of the appendix 1 of Art. 29 of the Budget Code of Ukraine it was introduced a special procedure for distributing the ecological tax for emissions of pollutants by stationary sources of pollution, which consists in the fact that the tax on carbon dioxide emissions is included in the general fund of the state budget in the amount of 100 percent, while the tax on the emissions from other types of pollutants are counted in the general fund of the state budget only in the amount of 45 percent.

Consequently, the taxpayers of the ecological tax transfer the amounts charged for emissions, except for carbon dioxide emissions, discharges of pollutants and waste placement, with one payment order in the accounts, opened in the bodies that carry out treasury service of budget funds, which ensure the distribution of these funds in the ratio, defined by the Budget Code of Ukraine.

In order to ensure effective control over the distribution of environmental taxes on emissions of pollutants (carbon dioxide), taking into account the provision of para. 161 of Art. 29 of the Budget Code of Ukraine, it is necessarily prepared a separate Annex 1 to the tax return of the ecological tax approved by the order of the Ministry of Finance of Ukraine of 17.08.2015, No. 715, in terms of commitments for carbon dioxide emissions, starting already on obligations for tax on the IV quarter of 2018.

The provisions determined the basic tax (reporting) period for the ecological tax, which is equal to the calendar quarter.

The ecological tax payers make tax returns and submit them within 40 calendar days following the last calendar day of the tax (reporting) quarter to the controlling bodies and pay the tax within 10 calendar days following the last day of the deadline for submission of the tax return.

The deadlines for filing tax returns and paying taxes on the ecological taxes are:

• the IV quarter of 2018 – February 11, 2019, and the last day of the tax payment is February 19, 2019;
• the I quarter of 2019 – May 10 and May 20, 2019 respectively;
• the II quarter of 2019 – August 9 and August 19, 2019 respectively;
• the III quarter of 2019 – November 11 and November 19, 2019, respectively;
• the IV quarter of 2019 – February 10 and February 19, 2020, respectively.

The Ministry of Economic Development and Trade of Ukraine published on its website a List of passenger cars subject to the tax on transport tax in 2019.

Also, the calculation of the average market value of vehicles (cars, motorcycles, mopeds) is published on the site for purposes:

- taxation of sales transactions or exchange of movable property objects;

- taxation of the transport tax.

The calculation of the average market value of passenger cars for tax purposes by transport tax is made in accordance with para. 267.2 of TCU according to the Methodology for determining the average market value of passenger cars approved by the Cabinet of Ministers of Ukraine.

Accounting and Reporting

The State Fiscal Service of Ukraine in the category 109.03 “ZIR” reports on the use of cash registers when the sale of its own production, which, according to para. 1 of Art. 9 of the Law of Ukraine “On the Application of Registrars of Settlement Operations in the Sphere of Trade, Catering and Services” of 06.07.1995, No. 265/95-BP cash registers and accounting books are not applied when the trade in products of own production (except for technically complicated household goods that are subject to warranty repair, as well as medical products and medical supplies) enterprises, institutions and organizations of all forms of ownership, except for trade and catering enterprises, in the case of calculations in these enterprises, institutions and organizations with registration of incoming and outgoing cash orders and issue an appropriate receipt, signed by an authorized person of appropriate entity.

Products of own production include products manufactured and sold by the enterprise itself in a single technological process using their own or hired labor.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the registration of a cash transfer transaction through the cash register or issuing a payment receipt to the holder of an electronic payment instrument” of 28.12.2018, No. 5449/6/99-99-14-05-01-15/ІПК reported: an enterprise that provides holders of electronic payment instruments with the service of cash withdrawals using payment terminal (imprinter) on the basis of receipts of the payment terminal (spins), registers these transactions in the settlement documents of cash registers, creates account cash warrant for the total amount of transactions per day and makes an entry in the cash book.

At the same time, the cash receipt must additionally contain the following requisites:

• identifier of the acquirer and the merchant or other requisites that enable them to be identified;
• identification of payment device;
• amount of the commission (if any);
• transaction type;
• details of the electronic payment instrument (payment card) (valid by the rules of the security of the payment system), preceded by the capital letters “ЕПЗ”;
• inscription “Код авт.” (authorization code) and the authorization code or other code identifying the transaction in the payment system, except for cases when the rules of settlement of the payment system, which provide for the compilation of settlement documents with the use of electronic payment means (payment cards) without the implementation of authorization procedures;
• signature of the cashier and signature of the holder of the electronic payment instrument (payment card) (if provided by the rules of the payment system) in separate lines preceded by the inscriptions “Cashier” and “Holder of ЕПЗ” respectively.

Therefore, when a cash withdrawal transaction is reflected, it should be indicated “Cash withdrawals” and the relevant details of such a check for the holder of an electronic payment instrument in the cash withdrawal check of the cash register.

The State Fiscal Service of Ukraine in its Individual Tax Advice “On the reflection in the settlement document (cash check) of the cash register of the purchase of the goods on credit, information on the movement of funds shown in cash checks with the form of payment “credit” and filling in the record book of settlement transactions, filling in columns KORO”of 21.01.2019 No. 231/6/99-99-14-05-01-15/ІПК reported that companies that carried out settlement transactions with a deferred payment or a credit should give out to the buyer together with the goods a calculation document and indicate there a form of payment “On credit”.

The cash received by the company for a product sold on credit is required:

• or to be entered in the company cash with the registration of cash receipt voucher;
• or entered into the account and memory of the cash registers through the “service record” transaction and indicate in the service document the number of the fiscal check that was sold on credit.

It is not allowed to conduct repayment of a loan previously issued goods through the cash register and issue a cash check for the amount of payment as it increases the amount of payments made through the cash register.

Control and Responsibility

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the criteria for assessing the degree of risk from conducting business activities in medical practice and determining the frequency of planned state supervision (control) by the Ministry of Health” of 18.12. 2018 No. 1163 approved new criteria for assessing the degree of risk from conducting business activities in medical practice.

The criteria for assessing the degree of risk from conducting business activities in medical practice are:

• the term for conducting economic activity in medical practice;
• the type of medical care provided by the business entity;
• compliance by the business entity with the requirements of legislation during the conduct of economic activity in medical practice;
• the results of a clinical and expert assessment of the quality of the provision of medical assistance by a businessman during the last two to five years preceding the planned period;
• the number of specialties on which medical practice is conducted;
• the number of unscheduled state supervision measures carried out with respect to the entity over the past two or five years preceding the planning period.

The assignment of an entity to one of the three levels of risk is based on the sum of the points accrued according to all criteria from implementation of economic activity in medical practice:

• from 41 to 100 points – to a high degree of risk;
• from 21 to 40 points – to an average degree of risk;
• from 0 to 20 points – to a small degree of risk.

Planned measures of state supervision (control) in the field of conducting economic activities in medical practice are carried out in relation to the activities of economic entities, which are assigned to:

• high risk – no more than once every two years;
• average risk – no more than once every three years;
• insignificant degree of risk – no more than once every five years.

The Ministry of Economic Development and Trade of Ukraine on its website reminded that since January 1, 2019, the overwhelming majority of the technical standards of the Soviet Union “GOST” developed before 1992, ceased to be in force in Ukraine.

The necessity of termination of the Soviet GOSTs in the territory of Ukraine was determined by the Program of activity of the Cabinet of Ministers of Ukraine. According to the document in 2015, the State Enterprise “Ukrainian Research and Training Center for Standardization, Certification and Quality” (SE “UkrNDNC”), which serves as the National Standardization Authority, issued respective orders to repeal GOSTs with a loss in force for 2016-2018 years and with a complete rejection of them, starting January 1, 2019. Total 12090 Soviet GOSTs should have been canceled.

At the same time, in order to reduce the risks to business, the Ministry of Economic Development and the Ministry in advance invited all interested parties to submit their proposals for the abolition of state-owned enterprises that have lost their relevance. In addition, the National Standardization Authority has consistently provided clarification and advice on issues arising from the abolition of GOSTs.

During 2016-2018, proposals were made to the National Standardization Authority to extend the validity of certain GOSTs. As a result of the consultation, the National Standardization Body has issued a number of orders according to which 1173 Soviet GOSTs remain in force as of January 1, 2019.

Such GOSTs will be valid until January 1, 2022. In particular, these are standards for replacing which are currently being or are expected to carry out the development of projects of relevant national standards; standards referenced in regulatory acts; Standards of the Unified System of Design Documents; Standards developed in their time based on international standards, the versions of which are relevant in our time.

The list of Soviet standards that are currently in force can be found on the official website of SE “UkrNDNC”.

Since the continuation of the Soviet GOSTs after 2022 is impossible, the Ministry of Economic Development and the National Standardization Organization strongly recommend that all interested parties, who use GOSTs in their work, take advantage of the recommendations placed on the sites of the Ministry of Economic Development and Trade and SE “UkrNDNC”, and to find an alternative to the use of Soviet standards, which in fact are regulatory acts of an already non-existent state and contradict the innovations introduced in the field of technical regulation of Ukraine and Ukraine’s commitment to reform the sphere of technical standardization provided for by the WTO Agreement and the Association Agreement with the EU.

At the same time, if it is necessary to develop a national standard for the replacement of the relevant Soviet GOST, any interested party (authorities, producer associations, enterprises, public organizations, etc.) may act as the customer for the development of such a standard in accordance with the Law of Ukraine “On Standardization” of 05.06.2014, No. 1315-VII.

It should be recalled that the Law of Ukraine “On Standardization”, which entered into force on January 3, 2015, implemented the provisions of the WTO Agreement on Technical Barriers to Trade in the domestic legislation of Ukraine. Also, according to the Association Agreement between Ukraine and the European Atomic Energy Community, Ukraine gradually implements European standards (EN) as national standards, in particular, harmonized European standards. At the same time, Ukraine cancels conflicting national standards, in particular, the interstate standards (GOST), developed before 1992.

Labor and Salaries

The Cabinet of Ministers of Ukraine by its Resolution “On Approval of the List of Severe Disease, Disorders, Injuries, Condition Which Give the Worker the Right to Leave without Paying Salary for a Child who was not diagnosed with disability” of 27.12. 2018, No. 1162 approved the List of severe diseases, disorders, injuries, conditions, giving the employee the right to receive leave without saving salary for a child who was not diagnosed with disability.

It should be recalled that leave without salary savings at the will of the employee is mandatory for the mother or other persons, if the child without a disability, is diagnosed with severe perinatal affection of the nervous system, severe congenital developmental deficiency, a rare orphan disease, oncological, oncohematological disease, infantile cerebral paralysis, severe mental disorder, acute or chronic illness of kidneys of IV degree, – not more than until the child reaches the age of sixteen (para.3 of para. 1 of Art. 25 of the Law in Ukraine “On Leaves” of 15.11.1996, No. 504/96-BP).

The Ministry of Finance of Ukraine in its macroeconomic review and forecast predicted that in 2019 the average monthly salary of Ukrainians would amount to UAH 10.1 thousand.

“The average monthly salary of employees (gross) in hryvnias will be UAH 10 129 in 2019, UAH 11 451 in 2020, UAH 12 835 in 2021” the report said.

The nominal average salary, adjusted for the consumer price index, will grow by 6.9% in 2019 compared to 2018, by 6% in 2020, by 6.2% in 2021.

In 2018, the average salary amounted to UAH 8 713.

The Ministry of Social Policy of Ukraine by its Order “On Approval of Amendments to the Procedure for Granting Employers to the State Employment Service with Information on Employment of Citizens with Additional Guarantees in Promoting Employment” of 23.11.2018 No. 1763 approved the relevant amendments.

It should be recalled that the Law of Ukraine “On Amending Certain Legislative Acts of Ukraine Regarding the Increase of Pensions” of 03.10.2017, No. 2148-VIII amended the part two of Article 14 of the Law of Ukraine “On Employment of the Population” of 05.07.2012 No. 5067- VI on the establishment of enterprises, institutions and organizations with a number of full-time employees from 8 to 20 persons a quota of not less than one person in the average number of full-time employees for the employment of persons who before the right to a pension on the basis of age in accordance with Article 26 of the Law of Ukraine “On Mandatory state pension insurance” of 09.07.2003 No.1058-IV left 10 or less years.

Obligatory condition for employers to comply with the quota is the employment of such citizens in accordance with the requirements of the legislation on which employers should inform the State Employment Service in accordance with the established procedure.

In this regard, it became necessary to amend the Procedure for providing employers with the State Employment Service information on employment of citizens who have additional guarantees in the promotion of employment, approved by the order of the Ministry of Social Policy of Ukraine of 16.05.2015, No. 271, for the purpose of bringing it in accordance with the requirements of the current legislation.

The amendments stipulate that information on employment of citizens with additional guarantees in the promotion of employment is obliged to provide enterprises, institutions and organizations irrespective of the form of ownership, with the number of full-time employees of 8 persons (previously this obligation was for enterprises with the number of workers from 20 people). As before, reporting is submitted annually no later than February 1 after the reporting year.

In addition, the term “quota” is set out in new edition.

The new version provides a form for information on employment of citizens, where it will be necessary to indicate the average number of staff members, who are 10 or less years before the right to pension according to age.

Consequently, it is necessary to report on employment of citizens with additional guarantees in the promotion of employment in 2018 by February 1, 2019, according to the updated form.

In case of non-fulfillment by the employer of the quota for employment of citizens who have additional guarantees in the promotion of employment, a fine for each unreasonable rejection of employment within the limits of the corresponding quota in the amount of twice the amount of the minimum wage established at the time of detection of the violation is to be charged.

The Ministry of Social Policy of Ukraine in its letter “On the quota of workplaces for persons of pre-retirement age” of 09.11.2018, No. 21833/0/2-18/53 reported that the requirement for implementation of the quota specified in para. 2 of part. 2 of Art. 14 of the Law of Ukraine “On Employment of the Population” of 05.07.2012, No. 5067-VI (hereinafter – the Law) is applied to companies, institutions and organizations in which the staff number is 20 persons. According to which enterprises, institutions and organizations with a number of full-time employees from 8 to 20 persons are set a quota of not less than one person in the average number of full-time employees who before the onset of the right to retirement according to age according to Art. 26 of the Law of Ukraine “On Compulsory State Pension Insurance” of 09.07.2003 No. 1058-IV left 10 or less years.

The requirement to establish a quota of 5% of the average number of full-time employees for the previous calendar year applies to enterprises, institutions and organizations with a number of full-time employees of more than 20 people (paragraph 1 of Article 2, Article 14 of the Law).

Concerning the implementation of the quota in case if the employee becomes a person of pre-retirement age in the second half of the reporting period.

According to Part 3 of Art. 14 of the Law, employers themselves calculate the specified quota based on the number of persons who, under full employment, already work at companies, institutions, organizations and belong to uncompetitive in the labor market (except persons with disabilities).

Consequently, if a person received additional guarantees in the reporting year in promoting employment in accordance with part 1 of Art. 14 of the Law, in particular, became a person who before the onset of the right to retirement according to age according to Art. 26 of the Law of Ukraine “On Compulsory State Pension Insurance” left 10 and less years and worked in a reported year on full employment terms, she/he should be taken into account when calculating the quota.

A mandatory condition for the employers to comply with the quota is the employment of citizens who have additional guarantees in the promotion of employment, specified in part 1 of Art. 14 of the Law, in accordance with the requirements of Part 2 of Art. 14 of the Law and the annual (no later than February 1 after the reporting year) information on this public employment service.

Responsibility for violation of the legislation on employment of the population is determined by Art. 53 of the Law. Para. 1 of Art. 53 of the Law stipulates that officials of executive bodies and local self-government bodies, enterprises, institutions and organizations, as well as individuals - entrepreneurs guilty of violating the law on employment of the population, are liable in accordance with the law.

In addition, para. 2 of Art. 53 of the Law provides that in case of failure by the employer during the year quotas for employment of citizens specified in part 1 of Art. 14 of the Law, a fine is levied from him/her for every unreasonable refusal to employ such persons within the limits of the relevant quota in the amount of twice the minimum wage established at the time of the detection of the violation.

Financial Services Market

The National Bank of Ukraine by its Resolution “On Amending Certain Legislative Acts of the National Bank of Ukraine” of 28.01.2019, No. 23 settled the following issues:

• the procedure for the use of electronic signatures on electronic documents (including electronic payment documents);
• the abolition of the provision for submission to the bank of a card with specimen signatures by individuals-entrepreneurs, individuals who carry out independent professional activities, individuals-non-residents - investors;
• the obligation of banks to send notices to the bodies of the state executive service or private executors on the opening/closing of accounts of individuals, information about which is included in the Unified Register of Debtors;
• the use of conditional storage (escrow) when performing real estate purchase transactions.

This document was approved in compliance with the requirements of the Laws of Ukraine “On electronic trust services” of 05.10.2017, No. 2155-VIII, and “On amendments to certain legislative acts of Ukraine regarding the creation of economic conditions for strengthening the protection of the rights of the child to proper maintenance” of 03.07. 2018, No. 2475-VIII (came into force on July 7, 2018 and on August 28, 2018, respectively).

The resolution made amendments to:

• Instructions on the procedure for the opening, use and closing of accounts in national and foreign currencies, approved by the decision of the NBU Board dated 12.11.2003, No. 492;
• Regulation on the procedure for the implementation by banks of Ukraine of deposit transactions with legal entities and individuals, approved by the decision of the NBU Board dated 03.12.2003, No. 516;
• Instructions on cashless settlements in Ukraine in national currency, approved by the decision of the NBU Board dated 21.01.2004, No. 22.

The Resolution came into force on January 31, 2019.

The National Bank of Ukraine adopted the Resolution “On Approval of the Amendments to the Instruction on the Procedure for the Opening, Use and Closing of Accounts in National and Foreign Currencies” of 28.12.2018, No. 159, which gave the right to third parties to identify and verify individuals when opening accounts in a bank.

This step will optimize the system of identification and verification of individuals, as well as increase financial inclusion and affordability of financial services.

In particular, banks got the right:

• when opening an account, use information about the identification data of clients - individuals received from another bank through the BankID system of the National Bank. Between the bank that opens the account and the bank that is the subscriber-identifier, the corresponding contract agreement must be concluded. The identification procedure is determined by the normative legal acts of the National Bank on financial monitoring and functioning of the BankID system of the National Bank;
• to entrust resident legal entities, individuals-entrepreneurs residents and individuals-residents (agents) on a contractual basis to identify and verify the clients of the bank - individuals. The procedure for such identification and verification is determined by the normative legal act of the National Bank on Financial Monitoring.

Also, the National Bank:

• provided the opportunity to transfer funds in national currency from the current account of a resident individual to the current account of a non-resident individual in the case of selling a private non-resident individual property in the territory of Ukraine to a resident individual if this property is not the object of investment activity in Ukraine;
• abolished the provision on the submission by an individual carrying out an independent professional activity to the bank at the time of opening, the account a copy of the document confirming that the person was registered in the Pension Fund of Ukraine;
• granted the right to individuals to transfer funds from current accounts to repayment of inherited savings (deposits) certificates and interest thereon;
• determined the necessity of submitting to the bank foreign representations employing hired labor and, in accordance with the laws of Ukraine, are payers of the unified contribution, copies of the document confirming their registration with the relevant controlling body;
• regulated the settlement by an individual resident of foreign currency settlements with the primary dealer for the transactions of placement of bonds of domestic government loan denominated in foreign currency.

The National Bank of Ukraine reported on its website that based on the results of 2018, Ukraine’s international reserves grew by 10.6% and as of January 1, 2019 amounted to $ 20.8 billion (equivalent). Such a volume of reserves not only exceeded the last forecast of the National Bank, but also reached the five-year maximum, for the last time such level of reserves was fixed in October 2013.

The increase in international reserves was first of all due to Ukraine’s external financing and the purchase of a surplus of currency by the National Bank on the interbank market.

In general, as of January 1, 2019, the amount of international reserves covers 3.5 months of the future imports and is sufficient to meet Ukraine’s obligations and current transactions of the Government and the National Bank. At the same time, an important factor in maintaining macro-financial stability in Ukraine is the continuation of cooperation with the International Monetary Fund and a balanced monetary and fiscal policy.

The National Bank of Ukraine approved and promulgated all regulatory acts basic for a new liberal system of currency regulation, stipulated by the Law of Ukraine “On Currency and Currency Transactions” of 21.06.2018, No. 2473-VIII.

The new system consists of 8 major decisions of the NBU Board, which replaced the preliminary base of 56 normative legal acts in the field of currency regulation.

In general, from February 7 more than 20 exemptions will be introduced:

• it is doubled the deadline for settlement of export-import contracts – up to 365 days;
• it is canceled the currency control over export-import transactions up to UAH 150 thousand;
• it is allowed the free use of accounts of legal entities abroad (except for transactions for the transfer of funds from Ukraine to such accounts);
• it is canceled the individual licenses for currency transactions – they will be replaced by a system of e-limits (2 million euros/year for legal entities, 50 thousand euros/year for individuals);
• it is canceled the sanctions in the form of termination of foreign economic activity for violation of the terms of settlements;
• it is canceled the restriction on early repayment of external obligations;
• it is allowed to conclude currency forwards for hedging export-import and debt transactions;
• it is allowed to carry out transactions on accounts of legal entities - non-residents in Ukrainian banks;
• the procedure for registration of external borrowings is canceled;
• it is allowed on-line purchase of foreign currency by individuals (within the limits of the cash currency purchase limit – up to 150 thousand hryvnias per day in the equivalent);
• banks are allowed to sell government securities denominated in foreign currency for foreign currency to their clients;
• banks are allowed to enter into currency swaps with residents and non-residents;
• it is allowed unlimited investment of banks in investment securities of investment class;
• it is increased the limit for foreign currency transfers abroad without opening an account for individuals – from 15 to 150 thousand hryvnias per year;
• it is increased the limit on the purchase of banking metals by individuals and legal entities from 3.21 troy ounces per week (100 g) to the equivalent of 150 thousand hryvnias per day (without restrictions for legal entities conducting activities related to the use of banking metals);
• legal entities are allowed to import-export of banking metals, if provided by their statute;
• residents are allowed to make payments in foreign currency when life insurance;
• it is allowed to invest and loan residents from the LORO account in hryvnias of a non-resident bank;
• non-resident banks are allowed to buy currency for the entire amount of the balance in UAH in the account LORO;
• it is allowed to buy and accumulate foreign currency on the account for payments for external borrowings;
• it is canceled dual control over export transactions – currency supervision will be carried out only by the bank which received information on the corresponding customs declaration;
• it is allowed to invest in Ukraine not only in the currencies of the first, but also the second group of currency classifier;
• it is unified the movement of currency values across the border.

Removing of restrictions that create the most additional difficulties for foreign economic activity and restrain new foreign investments into Ukraine is among main priorities of the NBU.

Within the framework of the new system of currency regulation, the NBU also transitions from the system of total foreign exchange control for each transaction to currency control, built on the principle of “more risks – more attention, less risk – less attention”.

Banks will be able to weaken the supervision of most business transactions that will not have signs of dubious transactions (inconsistent volumes of transactions with volumes of ordinary business activity, mismatching the essence of the transactions of the content of the client, use in the calculation of shell companies, etc.).

Global Affairs

The Cabinet of Ministers of Ukraine reported on its website that on January 1, 2019, the application of the provisions of the Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin began between Ukraine and the European Union in bilateral trade.

Pan-Euro-Med Convention is an instrument that establishes identical rules of origin for goods used in the framework of free trade agreements between its contracting parties.

In the future, the use of Pan-Euro-Med will increase the benefits for national exporters by opening additional opportunities for Ukrainian producers: they will be able to use the principle of diagonal cumulation of origin of goods applied between parties to the Convention, subject to the existence of free trade regimes between them.

There are currently 25 members of the Convention, namely: the EU, EFTA countries (Iceland, Liechtenstein, Norway, Switzerland), Albania, Algeria, Bosnia and Herzegovina, Georgia, Egypt, Israel, Jordan, Lebanon, Kosovo, Macedonia, Morocco, Moldova, Palestine, Serbia, Syria, Tunisia, Turkey, Ukraine, Faroe Islands and Montenegro.

Ukraine concluded free trade agreements with the following members of the Regional Convention: EU, EFTA, Georgia, Macedonia, Moldova, Montenegro. The Free Trade Agreement between Ukraine and Israel is being prepared for signing. Negotiations on the conclusion of the Free Trade Agreement between Ukraine and Turkey are ongoing.

In practice, the application of the provisions of the Pan-Euro-Med Convention means that the Ukrainian producer will be able to procure raw materials or components in one of the parties to the Convention and export the finished products to another party to the Convention without paying customs duties or at a reduced rate of duty.

This will facilitate the opening of new production capacities, increased use of production potential, and the involvement to the regional and international chains of value added creation.